Expects to build allowance for loan losses by approximately $200 million in
the third quarter
MCLEAN, Va., Sept. 23 /PRNewswire-FirstCall/ -- Capital One Financial
Corporation (NYSE: COF) today affirmed its 2008 financial expectations, as
originally articulated in the Second Quarter 2008 Earnings Presentation dated
July 17, 2008.
The company expects a low single-digit decline in year-end managed loans,
and double-digit growth in year-end deposits.
The company expects low to mid-single digit revenue growth. If revenue
margins remain at or near second quarter levels, the company expects to be
toward the lower end of this range for full year 2008.
The company expects its efficiency ratio for full year 2008 to be in the
mid 40 percent range or lower, with the quarterly efficiency ratio drifting up
modestly in the second half of the year. Revenue trends will be the biggest
driver of efficiency ratio. The company expects 2008 operating expenses to be
at least $200.0 million below their 2007 level.
The company expects to continue its quarterly dividend of 0.375 cents per
share, while maintaining its Tangible Common Equity ratio at or above its 5.5
to 6.0 percent target range through 2008.
The company expects continuing weakness in the U.S. economy.
The company expects the charge-off rate for its U.S. Card line of business
to be in the low 6 percent range for the third quarter of 2008, rising to
around 7 percent in the fourth quarter.
In addition to affirming the 2008 outlook summarized above, the company
currently expects to build its allowance for loan losses by approximately
$200.0 million in the third quarter, consistent with the company's expectation
of continuing weakness in the U.S. economy, as observed in recent trends in
economic indicators, including home prices and the unemployment rate. This
expected allowance build would result in an allowance for loan losses as of
September 30, 2008 that would have the capacity to absorb the equivalent of
approximately $7.2 billion in managed losses over the next 12 months, through
the end of the third quarter of 2009.
Forward looking statements
The company cautions that its current expectations in this release for
2008 revenue growth, loan and deposit growth, return on equity, the projected
charge-off rate and revenue margin in the U.S. Card subsegment for 2008,
estimated loss levels for the 12 months ending September 30, 2009 underlying
the expected allowance build in the third quarter of 2008, credit performance
and trends, operating efficiencies, operating expense reductions, and
dividends, including future financial and operating results, and the company's
plans, objectives, expectations, and intentions, are forward-looking
statements and actual results could differ materially from current
expectations due to a number of factors, including: general economic
conditions in the U.S., the UK, or the company's local markets, including
conditions affecting interest rates and consumer income and confidence,
spending, and savings which may affect consumer bankruptcies, defaults,
charge-offs and deposit activity; changes in the labor and employment market;
changes in the credit environment; the company's ability to execute on its
strategic and operational plans; competition from providers of products and
services that compete with the company's businesses; increases or decreases in
the company's aggregate accounts and balances, or the growth rate or
composition thereof; the risk that the benefits of the company's cost savings
initiative may not be fully realized; changes in the reputation of or
expectations regarding the financial services industry or the company with
respect to practices, products or financial condition; financial, legal,
regulatory, tax or accounting changes or actions, including with respect to
any litigation matter involving the company; and the success of the company's
marketing efforts in attracting or retaining customers. A discussion of these
and other factors can be found in the company's annual report and other
reports filed with the Securities and Exchange Commission, including, but not
limited to, the company's report on Form 10-K for the fiscal year ended
December 31, 2007 and report on Form 10-Q for the quarters ended March 31,
2008 and June 30, 2008.
About Capital One
Capital One Financial Corporation (http://www.capitalone.com) is a
financial holding company whose subsidiaries collectively had $92.4 billion in
deposits and $147.2 billion in managed loans outstanding as of June 30, 2008.
Headquartered in McLean, VA, Capital One has 740 locations in New York, New
Jersey, Connecticut, Texas, and Louisiana. It is a diversified financial
services company whose principal subsidiaries, Capital One, N.A., Capital One
Bank (USA), N. A., and Capital One Auto Finance, Inc., offer a broad spectrum
of financial products and services to consumers, small businesses and
commercial clients. A Fortune 500 company, Capital One trades on the New York
Stock Exchange under the symbol "COF" and is included in the S&P 100 index.
SOURCE Capital One Financial Corporation
/CONTACT: Investor Relations, Jeff Norris, +1-703-720-2455, or Danielle
Dietz, +1-703-720-2455, or Media Relations, Julie Rakes, +1-804-284-5800, all
of Capital One Financial Corporation /
/Web site: http://www.capitalone.com /
CO: Capital One Financial Corporation
IN: FIN MFD
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4030 09/23/2008 17:00 EDT http://www.prnewswire.com